Teradyne,
Inc. (NYSE:
TER) reported revenue of $323 million for the fourth
quarter of 2014 of which $237 million was in Semiconductor Test, $46
million in System Test and $40 million in Wireless Test. On a non-GAAP
basis, Teradyne’s net income in the fourth quarter was $31.1 million, or
$0.14 per diluted share, which excluded a Wireless Test goodwill
impairment charge of $99 million, pension actuarial losses of $47
million as well as acquired intangible asset amortization and discrete
income tax adjustments. GAAP net loss for the fourth quarter was
($103.8) million or ($0.48) per share.

Orders in the fourth quarter of 2014 were $332 million of which $226
million were in Semiconductor Test, $67 million in System Test and $39
million in Wireless Test.

For the fiscal year, Teradyne reported revenue of $1,648 million of
which $1,301 million was in Semiconductor Test, $185 million in Wireless
Test, and $162 million in System Test. On a non-GAAP basis, Teradyne’s
net income for 2014 was $265.6 million, or $1.23 per diluted share which
excluded the charges noted above, a first quarter 2014 CEO retirement
equity charge, and non-cash convertible debt interest. GAAP net income
for the year was $81.3 million or $0.37 per share and GAAP operating
profit declined 49%. Cash provided by operating activities for 2014 was
$493 million and purchases of property, plant and equipment were $170
million.

“The fourth quarter wraps up a very strong year for Teradyne from both a
market share and cash flow perspective,” said CEO and President Mark
Jagiela. “Revenues grew 15% driven by strong System-on-a-Chip (SOC)
demand, our operating profit grew 26%, and we generated over $300
million in free cash flow. Despite an expected softening of SOC test
demand in 2015, our cycle hardened operating model, combined with our
long term outlook for the markets we serve, provides us the confidence
to substantially increase our capital return plans for 2015.”

Teradyne announced that its Board of Directors has approved a share
repurchase program authorizing the Company to repurchase up to $500
million of its common stock through open market or private transactions.
The $500 million authorization replaces the Company’s existing
repurchase program announced in 2010.

The Board of Directors has also declared a quarterly cash dividend of
$0.06 per share, payable on March 24, 2015 to shareholders of record as
of the close of business on February 27, 2015.

“We intend to execute $300 million of the repurchase authorization this
year,” Jagiela continued. “Our strong balance sheet and expectations for
future cash generation provide Teradyne the flexibility to return
capital to shareholders through a significant share repurchase program
and a quarterly cash dividend while continuing to invest in future
growth and strategic business development opportunities.”

Guidance for the first quarter of 2015 is revenue of $320 million to
$345 million, with non-GAAP net income of $0.09 to $0.14 per diluted
share and GAAP net income of $0.07 to $0.11 per diluted share. Non-GAAP
guidance excludes acquired intangible asset amortization, gain on the
sale of an equity investment, and the related tax impact on non-GAAP
adjustments.

Webcast

A conference call to discuss the fourth quarter 2014 results, along with
management's business outlook, will follow at 10 a.m. ET, Thursday,
January 29. Interested investors should access the webcast at
www.teradyne.com
and click on "Investors" at least five minutes before the call begins.
Presentation materials will be available at
www.teradyne.com/investors
at 10 a.m. ET. A replay of the call will also be available on the
Teradyne website.

Non-GAAP Results

In addition to disclosing results that are determined in accordance with
GAAP, Teradyne also discloses non-GAAP results of operations that
exclude certain income items and charges. These results are provided as
a complement to results provided in accordance with GAAP. Non-GAAP
income from operations and non-GAAP net income exclude goodwill
impairment charge, acquired intangible asset amortization, retired CEO
equity charge, non-cash convertible debt interest, discrete income tax
adjustments, pension and post retirement actuarial gains and losses,
restructuring and other, and a gain from the sale of an equity
investment, and, prior to January 1, 2014, included income taxes on a
cash basis [cash taxes reflected the usage of prior year favorable tax
attributes (e.g. NOLs and credits) against current year tax liability].
GAAP requires that these items be included in determining income from
operations and net income. Non-GAAP income from operations, non-GAAP net
income, non-GAAP income from operations and non-GAAP net income as a
percentage of revenue, and non-GAAP net income per share are non-GAAP
measures presented to provide meaningful supplemental information
regarding Teradyne's baseline performance before gains, losses or other
charges that may not be indicative of Teradyne’s current core business
or future outlook. These non-GAAP measures are used to make operational
decisions, to determine employee compensation, to forecast future
operational results, and for comparison with Teradyne’s business plan,
historical operating results and the operating results of Teradyne’s
competitors. Non-GAAP gross margin excludes pension and post retirement
actuarial gains and losses. GAAP requires that this item be included in
determining gross margin. Non-GAAP gross margin dollar amount and
percentage are non-GAAP measures that management believes provide useful
supplemental information for management and the investor. Management
uses non-GAAP gross margin as a performance measure for Teradyne’s
current core business and future outlook and for comparison with
Teradyne’s business plan, historical gross margin results and the gross
margin results of Teradyne’s competitors. Prior to September 29, 2014,
non-GAAP diluted shares included the impact of Teradyne’s call option
and warrant on its shares. Management believes each of these non-GAAP
measures provides useful supplemental information for investors,
allowing greater transparency to the information used by management in
its operational decision making and in the review of Teradyne’s
financial and operational performance, as well as facilitating
meaningful comparisons of Teradyne’s results in the current period
compared with those in prior and future periods. A reconciliation of
each available GAAP to non-GAAP financial measure discussed in this
press release is contained in the attached exhibits and on the Teradyne
website at
www.teradyne.com
by clicking on "Investors" and then selecting the "GAAP to Non-GAAP
Reconciliation" link. The non-GAAP financial measures discussed in this
press release may not be comparable to similarly titled measures used by
other companies. The presentation of non-GAAP measures is not meant to
be considered in isolation, as a substitute for, or superior to,
financial measures or information provided in accordance with GAAP.

About Teradyne

Teradyne
(NYSE:
TER) is a leading supplier of Automatic Test Equipment used to
test semiconductors, wireless products, data storage and complex
electronic systems which serve consumer, communications, industrial and
government customers. In 2014, Teradyne had revenue of $1.65 billion and
currently employs approximately 3,900 people worldwide. For more
information, visit
www.teradyne.com.
Teradyne (R) is a registered trademark of Teradyne, Inc. in the U.S. and
other countries.

Safe Harbor Statement

This release contains forward-looking statements regarding future
business prospects, Teradyne’s results of operations, market conditions,
the payment of a quarterly dividend and the repurchase of Teradyne
common stock pursuant to a share repurchase program. Such statements are
based on the current assumptions and expectations of Teradyne’s
management and are neither promises nor guarantees of future
performance, future payment of dividends or future repurchases of common
stock. You can identify these forward-looking statements based on the
context of the statements and by the fact that they use words such as
“will,” “anticipate,” “expect,” “project,” “intend,” “plan,” “believe,”
“target” and other words and terms of similar meaning in connection with
any discussion of future operating or financial performance. There can
be no assurance that management’s estimates of Teradyne’s future results
or other forward looking statements will be achieved or that dividends
will be declared in the future. Additionally, the share repurchase
program may be suspended or discontinued at any time. Important factors
that could cause actual results, dividend payments, or repurchases of
common stock to differ materially from those presently expected include:
conditions affecting the markets in which Teradyne operates; decreased
or delayed product demand; increased research and development spending;
deterioration of Teradyne’s financial condition, the business judgment
of the board of directors that a declaration of a dividend or the
repurchase of common stock is not in the company’s best interests and
other events, factors and risks disclosed in filings with the SEC,
including, but not limited to, the “Risk Factors” section of Teradyne’s
Annual Report on Form 10-K for the fiscal year ended December 31, 2013
and Quarterly Report on Form 10-Q for the period ended September 28,
2014. The forward-looking statements provided by Teradyne in this press
release represent management’s views as of the date of this release.
Teradyne anticipates that subsequent events and developments may cause
management's views to change. However, while Teradyne may elect to
update these forward-looking statements at some point in the future,
Teradyne specifically disclaims any obligation to do so. These
forward-looking statements should not be relied upon as representing
Teradyne's views as of any date subsequent to the date of this release.

In the first quarter of 2012, we changed our accounting method from
delayed recognition of actuarial gains and losses for our defined
benefit pension plans and other post retirement benefit plans to
immediate recognition. We elected to immediately recognize net
actuarial gains and losses and the change in the fair value of plan
assets in our operating results in the year in which they occur.
Below are the pension losses (gains) included in our operating
results:

Quarter Ended

Twelve Months Ended

December 31, 2014

September 28, 2014

December 31, 2013

December 31, 2014

December 31, 2013

Cost of revenues

$

12,713

$

-

$

(2,717

)

$

12,713

$

(3,052

)

Engineering and development

12,223

-

(3,747

)

12,223

(4,406

)

Selling and administrative

21,628

-

(2,517

)

21,628

(2,882

)

$

46,564

$

-

$

(8,981

)

$

46,564

$

(10,340

)

(2)

Cost of revenues includes:

Quarter Ended

Twelve Months Ended

December 31, 2014

September 28, 2014

December 31, 2013

December 31, 2014

December 31, 2013

Provision for excess and obsolete inventory

$

688

$

6,434

$

6,976

$

22,193

$

16,592

Sale of previously written down inventory

(3,332

)

(6,332

)

(861

)

(13,058

)

(9,795

)

$

(2,644

)

$

102

$

6,115

$

9,135

$

6,797

(3)

For the twelve months ended December 31, 2014, selling and
administrative expenses include an equity charge of $6,598 for the
modification of Teradyne's retired CEO's outstanding equity awards
to allow continued vesting and maintain the original term in
connection with his January 31, 2014 retirement.

(4)

Restructuring and other consists of:

Quarter Ended

Twelve Months Ended

December 31, 2014

September 28, 2014

December 31, 2013

December 31, 2014

December 31, 2013

Employee severance

$

826

$

225

$

600

$

1,623

$

2,528

Acquisition costs

372

-

-

372

-

Contingent consideration fair value adjustment

-

(630

)

-

(630

)

-

Facility related

-

-

-

-

(448

)

$

1,198

$

(405

)

$

600

$

1,365

$

2,080

(5)

Interest and other includes:

Quarter Ended

Twelve Months Ended

December 31, 2014

September 28, 2014

December 31, 2013

December 31, 2014

December 31, 2013

Non-cash convertible debt interest expense

$

-

$

-

$

4,158

$

4,290

$

15,814

Gain from sale of an equity investment

-

-

(34,212

)

-

(34,212

)

$

-

$

-

$

(30,054

)

$

4,290

$

(18,398

)

(6)

Under GAAP, when calculating diluted earnings per share, convertible
debt must be assumed to have converted if the effect on EPS would be
dilutive. Diluted shares assume the conversion of the convertible
debt as the effect would be dilutive. Accordingly, for the quarter
ended December 31, 2013, and for the twelve months ended December
31, 2014 and December 31, 2013, 23.5 million, 5.0 million and 23.3
million shares, respectively, have been included in diluted shares.

CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands)

December 31, 2014

December 31, 2013 (1)

(unaudited)

Assets

Cash and cash equivalents

$

294,256

$

341,638

Marketable securities

533,787

586,882

Accounts receivable

151,034

157,642

Inventories

105,129

137,939

Deferred tax assets

57,239

72,478

Prepayments

95,819

136,374

Other current assets

6,582

7,324

Total current assets

1,243,846

1,440,277

Net property, plant and equipment

329,038

275,236

Marketable securities

470,789

271,078

Deferred tax assets

7,494

5,217

Other assets

10,419

14,591

Retirement plans assets

12,896

9,342

Intangible assets

190,600

252,291

Goodwill

273,438

361,792

Total assets

$

2,538,520

$

2,629,824

Liabilities

Accounts payable

$

47,763

$

62,874

Accrued employees' compensation and withholdings

100,994

95,619

Deferred revenue and customer advances

71,603

55,404

Other accrued liabilities

51,997

63,712

Accrued income taxes

20,049

11,360

Current debt

-

186,663

Total current liabilities

292,406

475,632

Retirement plans liabilities

108,460

91,517

Long-term deferred revenue and customer advances

19,929

13,756

Deferred tax liabilities

23,315

40,686

Long-term other accrued liabilities

15,430

23,139

Total liabilities

459,540

644,730

Shareholders' equity

2,078,980

1,985,094

.

Total liabilities and shareholders' equity

$

2,538,520

$

2,629,824

(1) The December 31, 2013 condensed consolidated balance sheet data was
derived from audited financial statements, but does not include all
disclosures required by accounting principles generally accepted in the
United States of America.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)

Quarter Ended

Twelve Months Ended

December 31, 2014

December 31, 2013

December 31, 2014

December 31, 2013

Cash flows from operating activities:

Net (loss) income

$

(103,811

)

$

22,343

$

81,272

$

164,947

Adjustments to reconcile net income to net cash provided by
operating activities:

For the quarters ended December 31, 2014 and September 28, 2014,
adjustment to exclude discrete income tax items.

(5)

For the quarter ended December 31, 2013, adjustment to record income
taxes on a cash basis. Cash taxes reflect the usage of prior year
favorable tax attributes (e.g. NOLs and credits) against current
year tax liability.

(6)

For the quarter ended December 31, 2013, Interest and other included
non-cash convertible debt interest expense and a gain from the sale
of an equity investment.

For the year ended December 31, 2014, selling and administrative
expenses include an equity charge for the modification of Teradyne's
retired CEO's outstanding equity awards to allow continued vesting
and maintain the original term in connection with his January 31,
2014 retirement.

(4)

Restructuring and other consists of:

Years Ended

December 31,2014

December 31,2013

Employee severance

$

1.6

$

2.5

Acquisition costs

0.4

-

Contingent consideration fair value adjustment

(0.6

)

-

Facility related

-

(0.4

)

$

1.4

$

2.1

(5)

For the years ended December 31, 2014 and 2013, Interest and other
included non-cash convertible debt interest expense. For the year
ended December 31, 2013, Interest and other included a gain from the
sale of an equity investment.

(6)

For the year ended December 31, 2014, adjustment to exclude discrete
income tax items.

(7)

For the year ended December 31, 2013, adjustment to record income
taxes on a cash basis. Cash taxes reflects the usage of prior year
favorable tax attributes (e.g. NOLs and credits) against current
year tax liability.

(8)

For the years ended December 31, 2014 and 2013, the calculation of
non-GAAP diluted earnings per share gives benefit to the Company's
call option on its stock for 34.7 million shares at $5.48. As a
result 5.0 million and 23.3 million shares, respectively, have been
excluded from non-GAAP diluted shares. For the years ended December
31, 2014 and 2013, net interest expense of approximately $2.0
million and $9.4 million, respectively, have been added back to
non-GAAP net income for the non-GAAP diluted earnings per share
calculation.

GAAP to Non-GAAP Reconciliation of First Quarter 2015 guidance:

GAAP and non-GAAP first quarter revenue guidance:

$320 million

to

$345 million

GAAP net income per diluted share

$

0.07

$

0.11

Exclude acquired intangible asset amortization

0.06

0.06

Exclude gain from the sale of an equity investment

(0.02

)

(0.02

)

Tax effect of non-GAAP adjustments

(0.01

)

(0.01

)

Non-GAAP net income per diluted share

$

0.09

$

0.14

For press releases and other information of interest to investors,
please visit Teradyne's homepage at
http://www.teradyne.com.